Suppose you have $10,000 in cash to invest.You decide to sell short $5000 worth of Kinston stock and invest the proceeds from your short sale,plus your $10,000 into one-year U.S.treasury bills earning 5%.At the end of the year,you decide to liquidate your portfolio.Kinston Industries has the following realized returns: The return on your portfolio is closest to:
A)-0.5%.
B)13.5%.
C)-2.5%.
D)14.5%.

Question

Suppose you have $10,000 in cash to invest.You decide to sell short $5000 worth of Kinston stock and invest the proceeds from your short sale,plus your $10,000 into one-year U.S.treasury bills earning 5%.At the end of the year,you decide to liquidate your portfolio.Kinston Industries has the following realized returns:  The return on your portfolio is closest to:
A)-0.5%. 
B)13.5%. 
C)-2.5%. 
D)14.5%.

Quizplus · Accepted Answer

The Answer of Suppose you have $10,000 in cash to invest.You decide to sell short $5000 worth of Kinston stock and invest the proceeds from your short sale,plus your $10,000 into one-year U.S.treasury bills earning 5%.At the end of the year,you decide to liquidate your portfolio.Kinston Industries has the following realized returns:  The return on your portfolio is closest to:
A)-0.5%. 
B)13.5%. 
C)-2.5%. 
D)14.5%.

Suppose You Have $10,000 in Cash to Invest